Canadian Mining Journal

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AGGREGATES: Anaconda Mining enters into an aggregates royalty agreement; monetizes waste rock



TORONTO: Anaconda Mining Inc. is pleased to report that it has entered into an aggregates royalty agreement with Shore Line Aggregates, a subsidiary of the Company’s local contract miner, Guy J. Bailey Ltd., where Anaconda has granted a right to SLA to mine, crush and ship an aggregates product made from Anaconda’s surplus stockpiled rock and in-situ rock from the Pine Cove pit at the Point Rousse Project in exchange for a production royalty (the “Royalty Agreement”) worth approximately $2,000,000. SLA is working with a dry bulk ship owner/operator, Phoenix Bulk Carriers (BVI) Ltd., a subsidiary of Pangaea Logistics Solutions Ltd., to fulfill a 3,500,000-tonne aggregates contract for a project located on the eastern seaboard of the United States. SLA and Phoenix began shipping the aggregates product at the end of September and expect it will take up to approximately 14 months to fulfill the contract. All dollar amounts are in Canadian dollars unless otherwise noted.

President and CEO, Dustin Angelo, states, “This Aggregates Venture is a tremendous opportunity for Anaconda, Guy J. Bailey, the local communities and the Baie Verte region as a whole. The additional economic development and jobs that come from this project will be a boon for the local economy. For Anaconda, we have an opportunity to generate additional revenue through a royalty and strengthen the infrastructure already established at the Point Rousse Project. In addition to a well performing gold mill, plenty of tailings capacity and mineral resources, we now have infrastructure in place that allows us to export waste rock and, with modifications, import ore to the benefit of the project.”

Owner of Guy J. Bailey Ltd., Scott Bailey, states, “We have made a significant investment in this project and it demonstrates our commitment to helping boost the economy of the Baie Verte region. We’re proud to be able to bring more employment to the area and we look forward to developing a longstanding venture with our partners.”

Vice President of Phoenix Bulk Carriers, Peter Koken, states, “We are proud to be a part of this venture and to have the opportunity to work with a group of highly motivated professionals.  The port facility at the Point Rousse Project has the potential to generate a substantial long term benefit to the project and the community. Its location is ideal to effectively penetrate the seaborne aggregates market, particularly along the East and Gulf Coasts of the United States.”

To be able to crush and load the aggregates product, SLA purchased the requisite crushing equipment and developed the production site just west of the Pine Cove pit on the shore of the Baie Verte Harbour. The dock facility consists of two causeways with cribbing at the end of them. A temporary, floating barge, approximately 100 feet wide by 400 feet long, serves as a platform for loading the aggregates onto ocean-going transport vessels.

Anaconda has received permits and/or approvals to construct facilities and operate the Aggregates Venture from the Newfoundland and Labrador Department of Natural Resources, the Newfoundland and Labrador Department of Environment and Conservation, the Federal Department of Fisheries and Oceans and Transport Canada. The Company is also presently working with the Canadian Environmental Assessment Agency (“CEAA”) as part of CEAA’s routine compliance assessment procedures. Anaconda has submitted a project description and expects a response from CEAA by the middle of December.

Opportunity:

The Royalty Agreement will generate approximately $2,000,000 of ancillary revenue for the Company over the next 14 months and turn a cost centre into a revenue centre. Under typical open pit mining operations at the Pine Cove pit, Anaconda has to remove and dispose of waste rock to extract the gold bearing ore. Consequently, the Company has to create waste dump areas to stockpile the waste rock. With the Aggregates Venture, the waste rock now becomes an innovative and environmentally friendly commercial product that can be shipped off site and generate revenue.

In addition, Anaconda is not required to provide any capital for the development or operation of the Aggregates Venture, but will own any improvements made to the site and any fixed, permanent infrastructure associated with the dock facility. Equally important, because of the logistics involved in the production of the aggregates product, Anaconda’s haul distance for its gold mining operation will be reduced, thus lowering mining costs.

The quality of rock and location of the Point Rousse Project present a unique opportunity for Anaconda. Material testing confirms that the rock is suitable for general aggregates purposes with acceptable LA Abrasion values, good absorption and soundness qualities. With water export access, this product is competitive in the seaborne aggregates market, resulting in an additional revenue stream for the Company and diversifying the Baie Verte area economy. Furthermore, the deposit at Pine Cove is located approximately 500 metres from the shore of the Baie Verte Harbour.

Economic and Environmental Impact:

The Aggregates Venture is anticipated to create approximately 40 shore side positions, particularly related to crushing and material handling, employed by SLA. In addition, it is anticipated that sea-side crews to staff two tugs will be required, in addition to other services required for vessel docking. There will also be a positive economic impact for local and regional vendors who are expected to supply goods and services to the Aggregates Venture as part of normal operations.

The shipment of aggregates for the Aggregates Venture will reduce the need for waste rock disposal on site and will decrease the overall environmental footprint of the Point Rousse Project.